Contract manufacturers are in considerable demand these days. This is because maintaining certain critical in-house divisions as brands is challenging. As such organizations seek reliable partners to support their business in the long term. Enter contract manufacturers.
Contract manufacturing is a basic method of outsourcing production. A common example is when big pharma cooperations use companies that carry out CDMO cell and gene therapy.
Enlisting the help of contract manufacturing eliminates the need to purchase machinery, materials, and additional labor, streamlining the production process and optimizing the supply chain. With all these evident advantages, you’d think there were hardly any disadvantages to the process.
However, many contract manufacturing processes come with cons. Below, we’ll discuss the pros and cons of using pharmaceutical contract manufacturers. First let’s start with the pros.
Pros and Cons in Contract Manufacturing
- Contract Manufacturing Pros
Access to Advanced Techniques
Being competitive in the pharmaceutical industry requires having the most current skill sets. Firms gain from contract manufacturers that have established relationships with raw material suppliers or effective manufacturing techniques. This aids the scaling process and also keeps their products in the market.
Cost Control and Profitability
Making a name for yourself in the pharma market can be challenging, especially with the CMS regulating the cost of raw materials, fabrication, equipment, and skilled labor.
However, by making it simpler to produce goods without incurring overhead expenditures, contract manufacturers have proven to be a godsend for firms. They help pharmaceutical companies better control their earnings and keep an eye on expenses.
Opportunities for Scalability
Massive scaling typically happens when an organization partners with the right CM. Contract manufacturers help in simplifying the scaling process, assisting relationship maintenance and solving language problems.
Gaining Technological Expertise
When sourcing new goods, great contract manufacturers will advise the businesses they work with on the optimum materials, techniques, and application processes. Top-notch CMs provide technical skills to maintain quality control systems, and save firms from time-intensive and cost draining exercises.
- Cons of Contract Manufacturing
When on the hunt for CMs you could get a promising third-party to run some company activities. But as time goes, the quality of service may drop. They can become less reliable and unable to manufacture specialised products.
In this case, finding a tested and trusted partner with a consistent track record is Paramount.
Intellectual Property Risks
Contract manufacturers preserve confidentiality and intellectual property rights. They carry all of the important information pertaining to the main company while maintaining restrictions to live up to the superior corporate culture.
However if there are breaches in the CMs, the owner company is liable to intellectual property risks.
Lack of Quality CMs in the Market
Finding knowledgeable, experienced contract producers is akin to unearthing diamonds from a mountain. Even after finding a good CM, you still have to match your objectives with them and ensure they align.
The main downside of the contract manufacturing process is that the firm undertaking the outsourcing is exposed to a certain risk if sufficient research is not conducted. Outsourcing production to the incorrect firm may wind up charging the corporation more rather than less if the outsourced company fails to perform as planned.
Overall, contract manufacturing fully serves its purpose. Unfortunately, not every big firm gets it right with hiring one due to the competition and subsequent risks involved. Still, some manufacturing contractors and pharma companies are a match made in heaven.
As a pharmaceutical company, you just have to weigh the pros and cons of CMs, before making a final decision.